Smart cities need smart government

Several weeks ago I had the opportunity to attend the Smart Cities NYC conference. Urban planning, sustainable design, cities, transportation systems: these obviously have nothing to do with Chef, but have been interest areas of mine for a very long time. I came away with some insights, particularly about the relative roles of government and private sector, and one thing stuck with me. If we don’t reform the civil service for the wired cities of the future, we risk turning over the fabric of our society to private corporations — to the extent that isn’t already happening.

Dan Doctoroff, CEO of Sidewalk Labs (a division of Alphabet née Google) gave a keynote whose thesis was, “what would a city look like if it was built from the Internet up?” While he was speaking, I could not help but be reminded of the birth of the New York City subway, upon which our city is literally built. Today, the MTA is a public-benefit corporation controlled by the State of New York, but at the beginning of the 20th century, the subway was privately owned, and there was not just one company, but two: the Interborough Rapid Transit Company (IRT) and the Brooklyn-Manhattan Transit Corporation (BMT). If you have wondered why the numbered lines use narrower trains that are incompatible with the lettered lines, or why there are few transfer points between numbered and lettered lines, this is why. Private corporations, competing amongst themselves for a piece of the market, will always create inefficiencies in the form of service duplication. That, after all, is one of the fundamentals of the free market and also why free markets tend towards monopolies as duplication is eliminated.

Problems arise, however, when we start applying free market dynamics to public services, like public transportation or electrical grids. Like many services in a city, these are what economists call merit goods, serving a population across a broad socio-economic spectrum, and therefore should not be profit-making. Even Adam Smith would agree. This is what gave me great pause listening to Doctoroff and others at the conference essentially advocating for the outsourcing of the urban fabric to large, profit-driven corporations like Alphabet.

I was shocked to see the outsize role that corporations are already playing in this space. For example, our city-wide Wi-Fi kiosks are operated by Intersection (Alphabet) and our public bike systems are owned and operated by Motivate (a joint venture between Related Companies, the real estate developer, Equinox Fitness, and Alphabet).

When I started looking at the résumés of some of the panelists, even the ones working in the most innovative areas of city government like the NYC Mayor’s Office of Technology Innovation, I started seeing more signs of trouble. Their backgrounds read like a revolving door between private sector and government. The pattern appears to be to drop into government for a few years, make a short-term mark, and then go to work for the private sector to make far more money consulting to governments. One imagines that sometimes those roles fill the holes that were left by their departure.

If we want our cities of the future to be “smart” from the perspective of having the benefits of technology innovation accrue to its citizens and not just private corporations, we are going to have to beef up the quality of the civil service. I have a dream that one day, a job in city government will be as attractive as a job in a tech startup. To make this a reality, I can think of three main changes that would need to happen:

• Make innovation (“lean product development”) a core part of government. No more NYC Mayor’s Office of Technology Innovation or US Digital Service-type initiatives that only serve to create an additional silo to isolate where innovation happens, with the implication that nobody else should innovate. By the way, I’ve seen this in the private sector too, and it almost never works.
• Pay government workers competitive salaries.
• Allow for poorly-performing workers to be managed out without artificial protections like unions that defend underperformers at all costs.

In the short term, I am not optimistic that this will come to pass. We are in such an anti-government era that conservative voters would rather close their public library system than to expand taxes and government (for, by the way, roughly $6/month per ratepayer for that library system). And so, for better or for worse, our smart cities of the future will primarily be built and controlled by private corporations like Alphabet until the day — if it comes — where it becomes unprofitable for them to be involved, and the public sector takes over.

There is precedent. In 1940, the Independent Subway System (IND) took over the failing IRT and BMT companies, creating the predecessor to today’s New York City Transit Authority. With cities in general, we can only hope this happens before the private sector companies have done too much damage by monetizing our data stream from their “smart technology”.